The SECURES Act, signed December 20, 2019 made a number of major changes, including those that affect retirement plans.

Changes to RMD age

Your required minimum distribution (RMD) start date for IRAs is the year after the owner turns age 72 (previously it was 70 1/2). This means that an owner turning 72 on September 1, 2021 will need to take a first RMD before April 1, 2022 and a second RMD on or before December 31, 2022.

What if you turned 70 1/2 before 12/31/2019? Unfortunately, this does not apply to you. However, you were not required to take a RMD during 2020 but must continue to take RMDs based on the previous rules in 2021 and after.

IRA Age Contribution Limit Gone

The Traditional IRA contribution age limit is gone, as well. Now, no matter how many birthdays you’ve had, you are still able to make a contribution to your Traditional IRA.

However, once you turn 70 1/2 and thereafter, you must reduce your Qualified Charitable Distribution (QCD) exclusion by all deductible contributions to a Traditional IRA (not taking into account any deductible IRA contribution previously used to reduce a QCD).

For example, Jim, age 72, has a Traditional IRA. In 2021 he contributes $6000 into this IRA. In 2022, he makes a $5000 QCD. His QCD exclusion would be zero, which results in the entire QCD of $5000 being taxed. In 2023, Jim makes no contributions to a Traditional IRA but makes a $8000 QCD. His QCD exclusion would be limited to $7000 [8000 – remaining 1000 of deductible contributions].

New Maximum Distribution Period for Inherited IRAs

Inherited IRAs are NOW subject to a 10-year maximum distribution period with the following five withdrawal exceptions for 2020 and beyond: Surviving spouse, minor children under 18, individuals less than 10 years younger than the account owner at time of inheritance, disabled/chronically ill individuals and inherited individuals who die before 2020.

Birth or Adoption-Related Distributions

Distributions from 401(k) plans for the purpose of qualified birth or adoption expenses are permitted and distributions up to $5000 are exempt from the 10% withdrawal penalty. An adopted child must either be under 18 or physically incapable or mentally incapable of self-support.

Small Employer 401(k) Enrollment

There is a new $500 credit each year for three years for small employers with 100 or fewer employees to automatically enroll employees in their 401(k). If you are ready to set up a retirement plan for your own business, the IRS website covers the actions you need to set up a 401(k) plan.

We at Heritage Income Tax are here for you, your tax planning needs, and the needs of your small business. If you are ready to make an appointment, please call (513) 900-9513 or email us at